Ontario apartment buildings bring investors double-digit returns. Some tenants say they're paying the price
CBC
A real estate investment company that's bought up dozens of older apartment buildings in recent years says it has become "a great Canadian growth story," while some of its tenants say they're living in a different reality.
Equiton's strategy is to buy buildings where existing tenants pay below-market rent, and renovate units when those tenants move so they can be rented out at higher rates, generating profits for its more than 8,000 investors, said its vice president Lavelle Lindo. Lindo shared the business insights in an interview with a wealth management company posted online in 2022.
"It presents us with a very, very, very good opportunity," Lindo said. "There's a lot of growth, a lot of development and just a lot of good expectations for the years to come."
Equiton currently owns 30 buildings in Ontario cities such as Toronto, Ottawa, Kitchener, Burlington, Brantford and London and is having a "strong" financial year, according to its June report. After paying operating expenses, it brought home close to $13 million last quarter — up 48 per cent compared to the same period last year. The fund had an investment return of nearly 14 per cent in 2022.
The model, a real estate investment trust, isn't unique in Canada. But tenants in one of Equiton's Hamilton apartment buildings say the company is making those profits at their expense.
Equiton purchased and began managing a high rise at 125 Wellington St. N. in 2021. Five tenants of the building told CBC Hamilton that deteriorating living conditions and above-guideline rent increases have pushed them closer to homelessness.
"They're making tons and tons of money off of us," said Chris Erie, who's lived in the building for over a decade and says she relies on the food bank in order to make her $800 monthly rent payments.
"If I lose this apartment I could not afford rent in this economy. I have no couch to surf on. I would be in a tent. I worry about it all the time — what's going to happen next year?"
Private real estate investment trusts have flourished under Ontario's current rules that allow landlords to raise rents between tenancies, which incentivizes them to push existing tenants out, said Steve Pomeroy, an executive advisor at the Canadian Housing Evidence Collaborative at McMaster University.
While not all of these companies are "predatory," Equiton stands out for some of the strategies it appears to use at 125 Wellington and demonstrates why there needs to be better protections for tenants, Pomeroy said.
"They are actually quite transparent in how bad they are," said Pomeroy, pointing to the contrast between their profit margins and tenants' living conditions. "They seem to be quite proud of [their actions]."
Equiton denied using predatory strategies, in a statement to CBC Hamilton.
"If residents respect other residents and pay their rent, we are happy to have them for as long as they wish," said spokesperson Kathy Gjamovska.
"We genuinely care about our residents. "
